How to account for personal cash used then reimbursed by contractor to business checking?

Thank you ChristieAnn for your prompt and thorough reply to my concern. Unfortunately, I'm still not clear on the final step as I understand it.

Here's what I summarize:

1. Create a new liability account for the expenses. I completely understand how that whole process works.

2. Create a journal entry debiting and crediting accounts equally for the expenses from the personal funds (using an accountant to get it right).

3. This I didn't understand:  "Lastly, you can now record the reimbursement process to make sure that everything is cleaning up. To do this, you can either record them as a check or an expense."

I'm not sure what the "reimbursement process" is. Isn't recording the reimbursement be a deposit? If I'm recording them as a check or expense that would duplicate step 2, or am I mistaken? 

In no part of this do I see the client pulling his cash reimbursement, since it isn't owner equity.

Would you please elaborate and clarify?

I appreciate your prompt reply, Momplusmore. I'm here to share with you some additional information about accounting for personal cash used for business expenses.

Yes, once you've used your personal account for business expenses, you have to record a check for reimbursement. 

1. From the Check or Expense window, select a bank account you'll use to reimburse the personal funds.
2. In the Expenses column, select Partner's Equity or Owner's Equity.
3. Enter the amount of the reimbursement.
4. Save the transaction.

On the other hand, you can record a deposit when reimbursing personal expenses paid from a business credit card or bank account.

1. Go to the Banking page.
2. Tap on Make Deposits.
3. Select the account to add the reimbursement from the Deposit To dropdown, then input the Date.
4. In the Received From field, enter the person who made the personal expense, then select the account. You can add the person as a customer if they aren't in your books already. Even if they're not a customer, this is the best option.
5. Select the Payment Method, then enter the reimbursement amount.
6. Tap on Save and Close.

For more tips about handling personal and business expenses you can check out these QuickBooks Online articles (the same scenario works for QuickBooks Desktop):

• Mixing business and personal funds
• Pay for business expenses with personal funds
• Pay for personal expenses from a business credit card or bank account

You can also get more tips about managing your QuickBooks transactions through this link: Help articles, video tutorials, and more.

If you have any other follow-up questions about recording your business and personal expenses, let me know by adding a comment below. I'm more than happy to help. Cheers for more success!

Thank you @Angelyn_T . Your explanation is clear and helpful, but I think I'm getting more lost. I'm so sorry in advance for a bunch more questions to clarify. Maybe this is too complex for this forum, but I'm going to give it a try anyway.

To confirm from my second post, do I have the first 2 steps right and are you addressing the third step of the original answer?

'Yes, once you've used your personal account for business expenses, you have to record a check for reimbursement."

To clarify, personal cash (not an account) was used for someone else's business expenses. Does that make any difference? 

Next, according to the original answer these expenses get entered in and applied to a liability account. Instead, should they be in the Owner's Equity account to later record this check/expense under Owner's Equity in step 2 below?

Part of the dilemma is that you might be referring to QB Online as I cannot find an "Expenses Window" in Desktop. Though I'd rather enter it as an expense from the bank account.

Since this is cash, your second option would not apply correct? Or are you referring to using the deposit to record the reimbursement of the cash funds?

From your post:

1. From the Check or Expense window, select a bank account you'll use to reimburse the personal funds.
2. In the Expenses column, select Partner's Equity or Owner's Equity.
3. Enter the amount of the reimbursement.
4. Save the transaction.

 

On the other hand, you can record a deposit when reimbursing personal expenses paid from a business credit card or bank account.

 

1. Go to the Banking page.
2. Tap on Make Deposits.
3. Select the account to add the reimbursement from the Deposit To dropdown, then input the Date.
4. In the Received From field, enter the person who made the personal expense, then select the account. You can add the person as a customer if they aren't in your books already. Even if they're not a customer, this is the best option.
5. Select the Payment Method, then enter the reimbursement amount.
6. Tap on Save and Close.

I'm here to share some clarifications when mixing business and personal funds, Momplusmore.

When recording a reimbursement, there isn't a difference if you use a personal or cash account. You can still record it as a check or expense.

For the correct account to use, it would be best to consult an accountant. They'll be able to guide you through the process to prevent messing up your books.

As for the Expenses column, you'll find it when you're in the process of creating the reimbursement. For your visual reference, I've attached a screenshot below.

To learn more about reimbursing the fund, I'd suggest checking out this article: Record Expenses Paid by the Owner’s Personal Funds. This ensures your record is accurate. 

Additionally, I've included these articles that'll help you in managing your QuickBooks account and your vendor transactions:

• Your QuickBooks Account
• Expenses and vendors

Let me know if you need further assistance in recording transactions in QuickBooks. I'm always here to help. Have a good one.